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Return of Winter Catches Natural Gas Bears Off Guard

After months of trading in a tight range between $2.75 and $3.10 per MMBtu, natural gas prices started to rise in late December with that momentum carrying into 2018. On January 23, natural gas prices hit an intra-day high of $3.62.After two historically warn winters, a bout of exceptionally cold weather sent U.S. naturally gas prices considerably higher from their December lows near $2.65. Natural gas accounts for around 30% of residential usage in the winter versus just five percent in the summer.The deep freeze also boosted beleaguered natural gas prices in Canada. Between Christmas and New Year, AECO, Alberta’s natural gas price benchmark, soared 72% from $2.50 per thousand cubic feet to $4.30.Sustained cold weather and rising natural gas prices helped lift natural gas stocks. After trading sideways for months, BHP Billiton Limited’s (NYSE:BHP) share price got a lift in early December and, as of the end of January, 2018, it has advanced more than 22%. Over the same period of time, Phillips 66’s (NYSE:PSX) share price has increased nearly eight percent.Admittedly, it is going to take a lot of cold weather to put a dent in storage levels and increase natural gas prices for the first half of the year. As we get closer to the summer months, investors, hedge funds, and other managers could become increasingly bearish.There might be more reason to be bearish on natural gas prices over the long-term. According to the U.S. Department of Energy, natural gas production is expected to exceed consumption over the next two years.1That has not happened in more than half a century and it should drive down natural gas prices. But there are many, many unexpected and unforeseen events that could propel natural gas prices higher. The key is learning how to read the markets.

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There are a lot of ways to invest in a commodity like natural gas (or gold, silver, copper, crude oil, wheat, coffee, cotton, sugar, etc). Two of the most popular ways include investing in natural gas stocks and investing in futures. Virtually every investor understands the basics of trading stocks. Investing in futures and predicting commodity prices is less well known. But trading futures can be even more lucrative. The licensed trading professionals at Learn-To-Trade.com can help teach you how to trade futures confidently and profit consistently.Learn-To-Trade.com is Canada’s oldest and leading provider of stock market trading courses. Whether you’re a seasoned pro or novice trader, the experts at Learn-To-Trade.com can show you how to profit no matter what the markets are doing.In fact, Learn-To-Trade.com is who the industry professionals turn to. Learn-To-Trade.com Inc.’s instructors are also educators for the Toronto Montreal Exchange, through which its instructors host educational sessions for major banks across Canada.At Learn-To-Trade.com, we understand that traders learn at different paces and have different needs, that’s why we provide a unique, Lifetime Membership that allows you to re-attend any part of the program as often as you’d like.To learn more about Learn-To-Trade.com’s stock market trading course, contact us at 416-510-5560 or by e-mail at info@learn-to-trade.com.Sources:
  1. “EIA expects 2018 and 2019 natural gas prices to remain relatively flat,” U.S. Energy Information Administration, January 25, 2018; https://www.eia.gov/todayinenergy/detail.php?id=34672
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